All Forum Posts by: Robert Morse

@Jonathan Watson Here is another source for you. They specialize in working with RE investors.

Mountain West IRA

@Jonathan Watson I get what your CPA says about the asset protection issue, but that’s a separate topic. I was only speaking to the tax implications of conducting things as a business (max deductions) versus personal (few if any deductions). Also, if you were to turn anything in less than a year, the capital gains tax is brutal!

@Teri Feeney Styers Good feedback, thank you.

I must first qualify my response. I'm not a CPA, I don't play one on TV, and I didn't stay at a Holiday Inn Express last night! Having said that, the obvious answer is to use the vehicle that will give you the greatest ROI. No matter which you choose, the most critical is to set up an investment account, e.g. a Roth 401(k). One mistake that is often made is investing in one's own name. The tax penalties can be ferocious! (Apparently, the IRS thinks that if you are a successful investor, they're entitled to most of your profits!) Talk with a tax professional about the best vehicle for your situation. Since you want a buy-and-hold strategy, I suspect you're going to want to put everything into a trust, but again, check with the experts.

As for the HELOC vs cash out refi, I think, particularly in your case, the HELOC makes the most sense, for a few reasons: 1) You're not likely to get the terms that you currently have, 2) the closing costs on a refi are a lot steeper, 3) with a HELOC, you only pay interest on the money while it's in use.

As for the stock portfolio, that may be a great opportunity to turn it into a self-directed fund.

Best of luck!

Did you get the tenants’ security deposit and pre-paid rent (if any) from the seller? If not, you may be on the hook for those.

@Les Jepsen Yes, thank you very much. I read everything I can and try to surround myself with experienced, knowledgable people. I definitely learned the hard way!

@Fred Heller Agreed! The problem with these guys is, they don’t promise that one will become a millionaire in six months, working only 10 hours a week at home in their jammies. When I hear that pitch, I run for the door as fast as I can! They tell you that it’s not a get-rich-quick game, that a lot of work is required, and that some just plain won’t succeed. Some don’t possess the requisite skills, others don’t really have the desire. All of those thing are true of any training or educational product, including the best colleges and the finest trade schools.

@Jeff Rabinowitz I re-read my original post and the way I phrased it was somewhat misleading; my bad! I only referring to the courses that so many folks have issue with that cost upward of $20K. Anyone who tries to do this entirely on their own will likely make some very expensive mistakes.

@Eric Griemsmann I don’t mean to suggest that folks who take these classes are stupid. Quite the contrary, I have met some pretty sharp folks, some of whom have been in RE a long time. The problem is these promoters are extremely good motivational speakers, and extremely good salesmen. So it has nothing to do with intelligence nor even gullibility. It has to do with believing that one is going to get the training they were promised and paid for. The best analogy I can think of is that these programs are like paying for a four year degree. One reasonably expects the content that is commensurate with a four year degree, while all that is received is the content of a first semester "fluff" class. Again, if the promises were delivered (irrespective of one’s ability to successfully apply it), there would be no issue. It’s simply that the content isn’t there, or at least isn’t delivered.

As far as seeming "like an honest businessman", thank you. I always strive to create "win-win" deals. If one person has to lose in order for another to win, it’s not, in my view, a good deal.

@Seth Nadreau I think you summed it up very nicely, well put.

@Jay Hinrichs I agree. I would not, however, be surprised at the number of long time RE agents that go to these things… I’ve met several! They are pretty sharp and I feel fortunate to have met them, a few of whom I stay in contact with. I also agree that $20-$30K is a drop in the bucket for good education, the operative being good.

I didn't state there were "no courses" that have any value. I am very much a proponent of education and training. I was specifically referring to the programs that are put on by the so-called "gurus", e.g., Trump, Montagliano, Rich Dad, Yancey, etc., etc. The list goes on and on. I signed up for the classes, so I speak as an "insider". I have joined local REI groups and continue to learn and seek advice and knowledge from others more experience than I.

I have read many discussions here as well as numerous other places on the i-net about the vast array of courses offered on real estate investing. As far as I can ascertain, there are zero, nada, zilch and none that are legit. Apparently, many are (or have been) operated by an outfit in Cape Coral, Florida. One that has recently gained a lot of notoriety is Trump University. The reality, though, is that, without exception, all of these "training" programs operate exactly the same way: Free seminar, $2K seminar, $20K training, expensive mentoring. In short, no matter how hard one works, the repeatable successes just don’t exist. Further, they have cranked out so many "wholesaling robots" that you can throw a rock in any direction and hit ten of them.

The point here is this: The only way to put a halt to all of their shenanigans is to cut them off at the pass. If you haven’t already signed up for one of these programs, don’t. If you have, and feel like you’ve been ripped off, file complaints with the BBB (usually these outfits are registered in Utah), the Attorneys General in your home state as well as where they are registered, and with the Federal Trade Commission. If enough people file complaints, the agencies that are responsible for being the watchdogs will start paying attention and play "Whack-A-Mole" as soon as they pop up.

I know that some of you are thinking, "If you get sucked in, it’s your own fault!" All I can say is, these guys are very good at what they do! Further, if they actually delivered on their promises, it would be a bargain at twice the price. Unfortunately, all one is left with is a bunch of unfulfilled promises: no real knowledge, no affordable funding, no anything that can’t be had elsewhere for a lot less money, and would probably be better, more accurate information, since it would be localized.

To borrow a phrase, "Good night, and good luck!"

Agree 100%! There are a lot of concepts that are introduced (wrap-arounds, lease options, tax deeds, etc.), but they are never discussed in enough detail to apply them in the real world. Basically, I think all these clowns need to be shut down. They don’t, and as a practical matter can’t, deliver on their promises. As to what I said, if I had found a mentor that was willing to "hold my hand", I think I would have been far more successful, but also, I didn’t know about BP or REIAs at the time… live and learn! Best wishes.